Law: Companies Ordinance, 1984

Section: 305 , 309

a. Companies Ordinance (XLVH of 1984)------ Ss. 305 & 309---Winding up of company for its failure to commence commercial production within one year of its incorporation; its inability to pay its debts despite repeated demands; and that its project was lying closed since specified date---Company disputed such claim and stressed that it was to commence its business and that repayment was to be made within one year from the date of start of its business---Validity---Neither company took pains to start commercial production nor were there sufficient stocks at site to justify inference that project was ready for commencement---Project was in fact lying closed without any progress at the site when inspected by official of petitioners--Ample material, on record thus existed to suggest that company had not commenced its. business and also that it failed to pay its debts or part thereof within one year ; of its incorporation--Non-commencement of commercial production within one year of Company's incorporation per se was strong and valid ground to direct winding up of company--Company's plea that commercial production having not commenced it was not liable for repayment of loan in instalments as agreed and undertaken, was not warranted by terms of agreement---Company had not cared to bring on `record any material to show even prima facie whether assets of company were in excess of liability against it---Huge amount received from petitioners (Bankers and others) Would seem to have been misappropriated and not utilised for the project-- -Case for winding up of company having been made out, it was just and equitable to direct its. winding up---Official liquidator was appointed to take over affairs of the company. Habib Bank Ltd. v. Farooq Compost Fertilizer Corporation Ltd. 1993 MLD 1571; Sindh Glass Industries Ltd. v. National Development Finance Corporation PLD 1996 SC 601; WTH's T Works Company v. G.E. Supply Company AIR 1936 All. 840; Tulsi Dag Lalloo Bhai v. The Bharat Khund Cotton Mills Company 1914 ILR 47; Pakistan Industrial Credit and Investment Corporation Ltd. v. Kalyal Kashmir Tanneries Ltd. 1995 CLC 1483 and Ali Woollen Mills Ltd. v. Industrial…